Aussie rises after inflation data, oil slips but remains above $30

The Australian dollar was one of the best-performing currencies in the Asian session on Wednesday. It gained 0.4 per cent to $0.7031 after Australian inflation data. CPI rose by 1.7 per cent in 2015, a tick up from the 1.5 per cent annual rate in the 12 months to September 30.

However, the core inflation rate, which strips out volatile food and energy prices, fell to an annual rate of 1.9 per cent in the December, the slowest pace for two-and-a-half years. This core rate is the Reserve Bank of Australia’s preferred measure of inflation.

Most economists think the inflation data are unlikely to rush the Reserve Bank of Australia into cutting rates. Some view that for the moment, the RBA can afford to tolerate low inflation because the jobs and activity indicators have been lifting.

The New Zealand dollar was the worst performing regional currency this morning, down 0.1 per cent at $0.6491, ahead of the Reserve Bank of New Zealand’s policy meeting on Thursday morning when economists expect the Board to keep rates on hold at 2.5 per cent but possibly introduce a more urgent easing bias given recent weakness in consumer prices there.

Japan’s yen was 0.2 per cent stronger at Y118.19 per dollar.

Gold was up 0.2 per cent at $1,1121.59 an ounce.

Brent crude oil was down 1.3 per cent in Asian trade on Wednesday at $31.38, but had surged by 4.3 per cent on Tuesday, helping to underpin gains for US and European equities. WTI oil was down 2 per cent this morning at $30.83 after rallying 3.7 per cent yesterday.

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